• AXS price is up 317% for the month, marking the best monthly return since data going back to November 2020.
  • Axie Infinity six-hour Relative Strength Index (RSI) flashing a bearish momentum divergence with the price.
  • 261.8% Fibonacci extension of the April-May correction is approximately 10% away from the current price, offering a new challenge.

AXS price has displayed incredible relative strength since the June 22 low, outpacing all of the cryptocurrencies on the watchlist by a sizable margin. The resulting overbought condition and elevation to an important Fibonacci extension level introduce some doubt about the rally’s sustainability from the current price. It is time to contemplate a minor correction for Axie Infinity to release the price compression in the coming days.

AXS price meets technical warning signs as rally extends

Axie Infinity has exploded onto the scene with a feverish rally of 760% since the June 22 low of $2.78. In fact, there have been only four down days over the 22 days, with the worst loss coming in at just -11%. Due to the velocity of the AXS price advance, the daily RSI has sustained extreme oversold readings since July 7. 

It is a remarkable development in the cryptocurrency market and an interesting story for a protocol that draws inspiration from CryptoKitties. As outlined in an FXStreet article on July 13, Axie Infinity “is a blockchain-based trading and breeding game that is built on the Ethereum blockchain.” Key to its widespread adoption has been the friendly and popular free-to-play model that has enabled it to climb past PancakeSwap and other notable dApps in terms of cumulative revenue.

The compelling fundamental story and the resulting AXS price advance have carried the digital token near the significant 261.8% Fibonacci extension level of the April-May correction at $26.40. It is a new technical challenge for Axie Infinity and maybe the only one since the breakout above the previous all-time high of $11.75.

AXS/USD daily chart

AXS/USD daily chart

The emerging bearish momentum divergence on the six-hour chart adds to the potential for an AXS price setback. The RSI does not confirm the recent price highs, suggesting that the Axie Infinity advance’s momentum is waning. Fading momentum is always discovered on the intra-day timeframes before it manifests in the daily chart, but the momentum divergence is not an explicit sell signal.

AXS/USD 6-hour chart

AXS/USD 6-hour chart

At this point, there is no definitive sell signal unless AXS price tags the 261.8% extension level now. However, suppose Axie Infinity does commence a corrective process. In that case, there will be substantial support at the intersection of the 38.2% retracement level of the June-July rally at $16.26, with the 10-day simple moving average (SMA) at $15.98 representing a 36% fall from the current price. A failure to hold that range would introduce the potential for a test of the 50% retracement level at $13.69.  

It is a challenge to call tops, but the emergence of the 261.8% extension level combined with the building momentum divergence on the intra-day timeframes does begin to stack the probabilities in favor of at least a mild Axie Infinity correction. The exact timing remains fluid.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

Crypto bulls unfazed by flash crash

Bitcoin price action initially shakes off strong selling pressure, finds buyers at support, then resumes some selling pressure. Ethereum price action mixed post-all-time high rejection. XRP price awaits its own bullish breakout and an opportunity to outperform its peers.

More Cryptocurrencies News

MATIC price ready for new all-time highs as $188 million flow into Polygon

The total number of transactions on Polygon network dropped nearly 15% due to a rise in transaction fees over the past week. This hasn’t negatively impacted the network as the number of unique daily active users remained stable. 

More MATIC News

AVAX price offers a bullish opportunity before Avalanche hits new all-time highs

Avalanche (AVAX) price has seen a bullish outbreak on Thursday after it broke out above – and then retested – the red descending trend line at $61.62. With even more buyers and bulls coming in, expect a run towards new all-time highs at $81.

More AVAX News

XLM price building base for bullish breakout

Stellar bulls are in the last phase of completing a bullish triangle. As XLM price is getting squeezed against the base ($0.40), expect a quick breakout of 12%. After taking a breather, expect another 10% of profits to follow. 

More Stellar News


Bitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast